No passports for US citizens owing taxes?

I’VE ALWAYS THOUGHT of my passport as a right, not a privilege. Born in the US, never having renounced my citizenship (nor do I plan to), I use this multi-paged little blue book for my comings and goings. It’s been through the wash (not recommended, and definitely not on purpose), had extra pages stitched in (used to be free, now costs a whopping $80+), and generally bounced around with me when work or life takes me across borders. And it (or its future iterations) is mine to keep.

Turns out, I was thoroughly mistaken. The US government can revoke your US-issued passport for one of several reasons, including: owing more than $2,500 in back child support, for being under investigation, for having been found to be a drug trafficker, or considered a threat to national security. Those are just a few.

Now, under a proposed law that is soon to be heard before the House of Representatives, owing back taxes could halt your movement beyond the US borders as well. The “Moving Ahead for Progress in the 21st Century Act” or “MAP-21,” — a law which mainly has to do with highways — also includes a provision which would allow the US government to refuse to grant, refuse to renew, revoke, or restrict the passport of any US citizen which, according to the IRS, owes $50,000.

You need not have been found guilty of tax evasion or fraud, provided the IRS alleges that you owe $50,000 in taxes. That is enough for the US government to limit your movement in and (more likely) out of the country. The fact that your movement could be controlled for an act you have not yet been found guilty of is troubling.

Who it applies to

A quick analysis shows that a person who makes $40,000 in taxable federal income in the United States (who has about a 25% tax liability) will owe $10,000 per year (plus penalties), and over the course of five years of paying no taxes at all, would accrue a tax bill of more than $50,000. But if you’re a high-earner who has more than $261,000 in taxable federal income, you could owe $50,000 in back taxes in about a year.

But not paying your taxes for five years? Do people really do that? Turns out they do. Run a Google search for “back taxes” and get 4.4 million returns. And speaking of returns, IRS documents indicate that as of 2010, federal employees and retirees alone (some 279,000 people) owed $3.4 billion in back taxes as of September 2010.

So apparently, people not paying taxes is a huge problem in the United States. But is passport revocation and denial effective? Only some 30% of US citizens are passport holders, and this number has risen since laws were passed to require their use for visits to Canada and Mexico.

And is it fair? Under Article 13 of the Universal Declaration of Human Rights, under a section frequently referred to in terms of freedom of movement:

(2) Everyone has the right to leave any country, including his own, and to return to his country.

Effectiveness

But the United States has claimed the right to restrict movement for people who owe child-support, presumably either as an incentive to pay the money they owe (which does not directly benefit the government), or to punish people who owe money. Presumably, the authors of the bill and those who approve it also wish to make life uncomfortable for people who owe $50,000 or more in taxes. I have to ask which purpose limiting travel for people who owe $50,000 will serve, as a deterrent to owing that much money (or an incentive to pay up), as a punishment if you do, or an incentive to make tracks if you owe $49,999.

For the text of the proposed law, go here, and to follow its progress through Congress, go here. And for a little further reading on tax and passports, check out this Atlantic article talking about how tax liability is causing increasing numbers of US passport holders to turn them in. But it seems that’s an option mainly for those who are citizens of another country. Not having any passport at all would put a serious damper on your (legal) travel plans.

Defending theoretical people who ignore paying taxes for 5 years really weakens your argument that the government shouldn’t be able to do this without a conviction. So does your lack of research on tax burdens (the annual taxes of someone earning $40,000 would be about $6000).

Plus, anyone who earns $198,000 (the rough amount your tax burden becomes $50,000) and doesn’t pay any taxes on it is an idiot.

If you want to make a strong case find an example where someone was actually hit with a $50,000+ tax liability that was later found invalid.

Bebe

You did not mention that this proposed legislation, which passed the Senate in March 2012, is courtesy of Sen. Barbara Boxer (D) of California’s Senate Bill 1813 originally extending federal transportation funds. Sen. Harry Reid (D) of Nevada proposed this rider, and, in the “politics makes strange bedfellows” column, Sen. Orrin Hatch (R) of Utah attached Sen. Reid’s proposal to the Boxer legislation. They are all mistaken to create this new burden on Americans, and regrettably they somehow believe this sort of tinkering with the tax code will make the collection of taxes fairer. And the IRS need only certify that you, the tax payer, owe the money.

BTW the US taxes income on a global basis. In 2008 Congress passed legislation allowing the IRS to declare someone who renounces US citizenship/permanent residency a “tax avoider” if he has net worth of over $2 million, and to tax those assets as if they were being sold. Further, if that ex-US citizen/permanent resident left his estate to a US citizen, the property would be taxed at the higher gift tax rate without a lifetime exclusion. Of course, $2 million is of significance for many Americans. Yet it is certainly possible in certain areas of the US for a couple’s house to have appreciated considerably over a two or three decades of residence, and, should either member of the couple for even benign reasons (not simply the heinous tax avoidance) choose to renounce US citizenship, then the sale proceeds of that house as a golden years’ nest egg would be taxed rather ruinously by the IRS.

There is an online 2008 Wall Street Journal article saying less than 500 persons renounced US citizenship in 2007. I am less concerned about a very few super rich US citizens leaving the US than I am about the punitive way our tax system and our officials appear to view all our citizens…even without a conviction as in Sen. Boxer’s legislation.

http://goo.gl/189kz Anonymous

what Mildred said I am blown away that any one able to make $4160 in 4 weeks on the internet. have you seen this site link==>> http://earn2usd.blogspot.com

Troops actually owe the IRS $390 million……. guess congress can bring them home and not send anyone to war again. Might even save a few of their lives.

Remo

Well first they came for the child support dead beats but I didn’t owe child support so I didn’t speak up. “Such people shouldn’t be taking vacations” they said. Then they came for the drug users but I wasn’t a drug user so I didn’t speak up. “How can you encourage THOSE people to leave to the islands to get their dope!” they said. Then they came for the tax cheats but since I wasn’t a tax cheat I didn’t speak up. “People who owe taxes should NEVER be able to go on vacation!” they said. Then there were the ones who owed medical bills, and student loans, and court judgements, and other fines but since I wasn’t one those I still didn’t speak up. Then I was told i couldn’t leave and that all passports required pre-approved exit visas and everyone knows the only reasons one ever leaves a country is for vacation and how can you leave now during the “crisis” when the country needs you, what are you … a terrorist?… Now I am trapped here awaiting the police… and there is no one left to speak up.

Skwon

I’m sorry Remo, I have no sympathy for Deadbeat Dads and Drug Dealers. Bad analogy.

mjh49783ab

Nor should we, but where will it end?

Remo

Funny thing about power – if you give it over to the government to get those you don’t have sympathy for they’ll turn right around and use on you. Either you are for freedom or against it. The government will not stop at whatever limit you think is just as no government in history has ever done this willingly. You approve of exit controls and needing permission to leave. Fine. That is what you have and when (not if) you find yourself on the wrong end of this you’ll have only yourself to blame. Too bad you won’t be only one to pay the price for your ignorance of history and overall stupidity.

mjh49783ab

I’ve already left. I’ve seen the writing on the wall. When they get to decide where and when you can and can’t go, based on their own specious moral view, and then justify it as something, good, proper, and just, that is when you become property of the state, a subject, and not a citizen.